EPA:

With U.S. EPA suddenly putting the brakes on several air regulations, what's the impact on industry and the states? During today's OnPoint, Michael Livermore, executive director of the Institute for Policy Integrity at New York University School of Law, discusses EPA's sudden shift on air regulations and the challenges to finalizing these rules.

Transcript

Monica Trauzzi: Hello and welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Michael Livermore, executive director of the Institute for Policy Integrity at New York University School of Law. Michael, it's great to have you back on the show.

Michael Livermore: It's a pleasure, thanks for having me.

Monica Trauzzi: Michael, EPA is suddenly putting the brakes on. The futures of utility MACT, boiler MACT, NSPS are all in flux. What's happening? Why are we seeing this slowdown?

Michael Livermore: These are hard rules, right? And there's also a political dynamic. So I think there are two things and it's very, very hard to suss out what's actually happening. Certainly, some observers are looking at this from the outside and they're saying, look, there was the now infamous shellacking. This is a response. Obama is moving back towards the business community in advance of the elections. This is something that he can do that's very concrete, that certainly the business community has been clamoring for. And the environmental community, just as a political force, doesn't have the juice that it takes to keep these rules moving forward. So that's certainly like one political analysis that's out there. The other alternative is that these are -- that the EPA genuinely is looking at these rules, I mean, and kind of trying to figure out what to do. The reality is these are complex rules and they're going to govern a huge sector of the economy for a very long time. And the Obama administration hasn't said they're not going to do any of these. I mean they just are kind of putting them off incrementally. Now, some of them have been put off kind of indefinitely or for a very long time, the coal ash rule and the hazardous air pollutant rule for industrial boilers. And so those rules are really in danger. Alternatively, the new source performance standards, that's just been delayed by a few months, so it's not clear that that represents a major shift of administration position.

Monica Trauzzi: So the NSPS specifically, why is that so difficult to sort of get that the details of that rule going and in place?

Michael Livermore: Well, I think the trick -- well, one is it's greenhouse gases, so that makes things more complicated and more politically contentious. So that's just a reality. Second is the administration, I think, is kind of in a bind because on the one hand the reality is market mechanisms, cap and trade, that's the preferred approach, because it's economically efficient. You achieve the greatest emissions reductions at the lowest cost. For whatever reason, political and otherwise, cap and trade has become like a dirty word or dirty three words and so they're very constrained in what they can do and in order to -- as a political matter to make efficiency happen. On the other hand, if you do command-and-control regulations, you can, yes, achieve emissions reductions, but it's in this politically contentious area and you're going to impose more costs. And so trying to balance those, those realities of actually getting emissions reductions while maintaining some flexibility is just incredibly complex actually, both as just a tactical matter, but also there's a really kind of overlay of kind of congressional politics that probably is playing a role.

Monica Trauzzi: Do you see a distinct shift in tone from EPA on air rules than what we saw maybe six months ago?

Michael Livermore: Yeah, I mean I think that that's fair and I think there's probably a lot of different reasons for it. Certainly, when there was the possibility of some congressional action, that made things different. The Obama administration wasn't acting alone and even having a house of Congress advancing legislation takes some of the political pressure off and just creates a little space. And when, of course, Congress isn't calling your administrator in at every opportunity to kind of whack them over the head, that also creates a fundamentally different dynamic. So at the very least, EPA is being more cautious and they've also kind of gone from the heady days of rule writing to the somewhat less heady and more hard days of finalizing these things, dotting the I's, crossing the T's, making sure that it's not going to have major kind of negative economic, unintended consequences and then getting ready to take the political punch when it finally comes.

Monica Trauzzi: Why do you think it's dangerous to delay these rules?

Michael Livermore: Well, of course, the reality is every time we delay these rules it actually results in mortalities. I mean people die as a result of these rules being delayed. I mean EPA's own numbers on the boiler MACT, let's just take this rule, which has been delayed kind of indefinitely, that's between 2500 and 6000 premature mortalities, according to the EPA's own estimates, every year. That's a lot of people and that's a huge economic thing, but it's also a very real human thing. And so that is a reason to do it as quickly as possible. So you always have that on the balance, on the balance sheet.

Monica Trauzzi: What's the impact on states who have been waiting on EPA for direction on how to implement these rules? All of a sudden now EPA is putting the brakes on. How are they impacted as they wait to see what's next?

Michael Livermore: Yeah, states and industry, right? So, yes, the big industry trade associations make a lot of noise about wanting to stop these rules. But for individual compliers, the people that actually have to comply with the rules, this kind of uncertainty is not a happy thing. You have to wait for a very long time in order to get things. You cannot invest, right? That's a big deal and the states, it's kind of in the same -- they're in a holding pattern, you know? They're basically in a holding pattern and if you've ever been in a holding pattern, like in an airplane, it's not all that pleasant. You have to just wait around, a huge amount of uncertainty, you don't know when things are going to land, hard to plan and there are real costs associated with that as well. So while the trade associations might make money actually and get a lot of kind of business and some very important by -- they gain through this kind of uncertainty. The actual businesses, it's not clear. If the rule is going to happen, it should just happen so we know what it's going to be and we can invest.

Monica Trauzzi: So what's your expectation for what we might see over the next couple of months coming out of EPA?

Michael Livermore: Yeah, that's a good question. I mean I think that we've dealt with the major rules at some level, so I don't think we're going to hear a lot of buzz. You know, I think it's going to be kind of quiet. That would be my anticipation. And it's really hard to say what's going to happen next round. Are we going to hear more about boiler MACT? Are we going to see utility MACT being pushed off? I mean these are big questions. I of course don't know the answer to them. I think it's a coin toss.

Monica Trauzzi: House leadership has indicated that they're planning a vote this summer on a bill that would create a cabinet level commission to study the cost of air rules proposed by EPA. Does this mean just more hurdles ahead for EPA and the regulations they're trying to put out?

Michael Livermore: It seems like Congress is pretty much taking every possible worst idea about how to change the administrative state and putting it into bills. Now, fortunately, none of them are going to pass or don't seem likely to pass. Yes, it's just more layers. We already have the Office of Information and Regulatory Affairs, which oversees the cost benefit analyses that are performed by agencies. It's headed by Cass Sunstein, extraordinarily well respected academic and well-known for his affiliation with -- an affinity for cost benefit analysis. So to add another layer of review on a specific set of rules is just -- it's not -- it doesn't make any sense from just the administrative state and how you want to run the government, much less from actually getting rules in place that are going to be saving lives.

Monica Trauzzi: OK, we'll end it right there. Thank you for coming on the show again.

Michael Livermore: Thanks, thanks very much.

Monica Trauzzi: And thanks for watching. We'll see you back here tomorrow.